3 of the many possible outcomes for the Canadian real estate market post-COVID-19
Though this question is purely speculation, we are going to cover some possible outcomes of the Canadian real estate market post-COVID-19. As Toronto Real Estate Broker Powell warns, trying to time the housing market at this time could be risky, given current volatility. Nobody knows what is going to happen post Coronavirus, and if they say they do, their forecast is only as good as an educated guess.
To answer this question with the least amount of bias, we have gathered opinions from top news sources, analysts, and real estate experts. Keep reading below to learn more about possible outcomes that may arise and what experts have forecasted for the real estate market after the Coronavirus is over.
Outcome #1: Canadian housing prices could drop 9-18% from pre-pandemic prices
The CMHC is forecasting that housing prices in Canada could drop as low as 9-18%, and they are calling this dip the ‘historic recession of 2020’. Canadian unemployment rates are above 13%, still rising, and the CERB funding is about to dry out. Yes, some of the country’s workforce is hired back as the country reopens; however, many jobs and companies will not be reopening. Thus, many individuals will just not be able to afford to move or will have to downsize. The lack of demand will be the main driver for reduced housing costs.
On the contrary to CMHC’s forecast, CIBC is a little more conservative on the housing market drop. They believe that housing prices in 2020 will drop 5-10% from 2019, with the largest decline in pricing being highly-priced units in condo buildings. The recovery of the Canadian market may start during the first half of 2021, and the rate of rebound will vary depending on the province or territory.
Outcome #2: Housing market volatility will continue across Canada until the vaccine arrives
CIBC believes that once the economy reopens, the country will be in recessionary conditions, and the housing market will be volatile. There is also no guarantee that a second wave of the Coronavirus won’t break out. If there were a second wave of the virus, this would entail implementing social distancing rules again, potentially closing down businesses and yet another hit to the already fragile Canadian economy.
Unfortunately, there is no going back to “normal” as the country reopens, and we flatten the curve. And CIBC experts expect a volatile housing market until there is a Coronavirus vaccine. Economists forecast that all the cumulative damage caused by the virus will result in entering recessionary conditions in 2021. Some of the damage will be recovered once companies can hire back employees or non-essential businesses are allowed to open up again. However, the smaller workforce, lack of disposable income, and reduced real estate investments will lower listing demand.
Outcome #3: New home construction market will suffer
Beyond declining house prices, new home construction will also suffer post-pandemic. Even worse, 2019 was supposed to be a record year for builders to complete new construction homes. Social distancing has slowed down new home construction, and developers say their productivity is down approximately 40%, which is huge for them. Other than reduced productivity, home builders have shortages of workers and building materials, which is not helping their situation improve quickly. Worse still, during the painful 2008 recession, new home construction didn’t fall below their yearly rate of 100,00 units; however, that target does not seem likely for 2019 or 2020.
There are many more outcomes for a post-COVID-19 market
There is also the narrative that the housing market won’t recover until the start of 2021 at the earliest. And some REALTORS® believe that there will be a spike in the fall of 2020. Either way, these are all educated guesses and market forecasts. The Canadian real estate market has rebounded from dark times before, and we believe the market can recover again.
Comment below and let us know your thoughts on what the Canadian real estate market will look like post- COVID-19.